I'm Political Economy editor at Forbes, editor of RealClearMarkets.com, plus a senior economic advisor to Toreador Research & Trading. I have book on how the economy works, Popular Economics: What LeBron James, the Rolling Stones and Downton Abbey Can Teach You About Economics that is set for release in April of 2015. I have a weekly column on Mondays at Forbes.com.

For De-Friending The U.S., Facebook's Eduardo Saverin Is An American Hero

As is well known now, Facebook co-founder Eduardo Saverin recently renounced his U.S. citizenship. Though no specific reason was given by Saverin for his decision, wise minds could very credibly proclaim him an American hero for doing what he did.

Indeed, Saverin’s U.S. “de-friend” is great for economic growth on its face, and then the political implications of his move will hopefully pay future taxation dividends that accrue to entrepreneurialism and advancement. Media members will vilify Saverin, but hysteria from that quarter is to be expected.

Saverin’s essential maneuver will at first glance hopefully get Americans thinking once again about our wrongheaded system of taxation. As it stands now, Americans, through taxes levied on income and capital gains, are explicitly forced to “prove” their income to the IRS.

Think about the above for a moment. A nation founded on skepticism about politicians and government now has as one of its most powerful institutions a revenue agency meant to badger its citizens about how much they owe a government utterly contemptuous of constitutional limits. To this insatiable beast, Saverin is apparently saying no. Good for him!

Saverin’s flight from the U.S. is yet another reminder of the superiority of a national consumption tax that in a perfect world would be implemented in concert with the abolition of the I.R.S. A limited federal government is a difficult concept to achieve so long as that same government can grant itself the legal right to tax a certain portion of our incomes. When individuals resist governmental hubris, we should exalt their actions.

Ideally Saverin’s situation will remind Americans that the feds work for us, and to ensure that they seek to serve our needs rather than bludgeon us for revenue that they can dole out to favored constituents, we’ll implement a consumption tax through which we can limit what we hand over to them to spend. And if the tax is regressive or hits low incomes at the same percentage as high ones, all the better. Everyone should know intimately the cost of government.

Saverin’s departure is also a reminder to politicians that while they can obnoxiously decree what percentage of our income we’ll hand them in taxes, what they vote for won’t necessarily reflect reality. Indeed, as evidenced by Saverin’s renunciation, tax rates and collection of monies on those rates are two different things. Assuming nosebleed rates of taxation were a driver of Saverin’s decision, politicians will hopefully see that if too greedy about collecting the money of others, they’ll eventually collect nothing.

Considering the capital gains that Saverin will shield from the federal government, this too is heroic. Indeed, we have a bloated, wasteful federal government today precisely because it collects way too much in the way of revenues. Also, deficits that supposedly keep liberals and conservatives up at night are easy to finance at low rates of interest precisely because investors know our Treasury has an endless supply of wealth creators to fleece for dollars.

That Saverin has chosen to avoid supporting the Leviathan is a heroic act that will hopefully make investors a little bit more gun-shy about investing in U.S. debt. And if the loss of Saverin’s millions means fewer government programs will achieve funding, U.S. taxpayers will make up for the Saverin shortfall in spades given the seeming inability of Congress to “sunset” any program. The seen here is what the Treasury will “lose” for Saverin going elsewhere; the unseen the exponentially greater gains that taxpayers will enjoy for Congress not having Saverin’s millions to spend in the first place.

Of course from a near-term economic and investment perspective, what Saverin is doing is stimulus personified. That’s the case because there’s quite simply no realistic way that he’ll be able to spend his looming windfall; one that will come in the form of dollars. And because Saverin won’t be able to spend all that comes his way after the IPO, it means he’ll save that which he doesn’t consume.

To put it simply, unconsumed savings don’t traditionally lie dormant under a mattress, rather the savings are lent to or invested in today’s and tomorrow’s entrepreneurs. In short, Saverin’s avoidance of the tax man means that his Facebook profits will reach future entrepreneurs as opposed to being wasted by the political class.

Oddly here, and this speaks to how silly the economic discussion has become, founder Mark Zuckerberg is being lionized for the presumed $1 billion in capital gains taxes he’ll pay the feds. Saverin’s avoidance plan means more capital for business growth while Zuckerberg’s non-avoidance ensures more feeding of the beast, yet Saverin’s the bad guy? Yes, very odd.

Though it’s small in the big picture, many of us who loath the mere notion of handing money over to the government always pay restaurant tips in cash; the idea there being that wait staff members are better able to hide cash income from the government. It’s a small thing, but ideally multiplied across government skeptics nationwide, it has some kind of impact.

In Saverin’s case, his decision to renounce his U.S. citizenship will have a definite impact, and for that, those of us who seek smaller government should view him as a hero. Saverin’s decision will starve the feds of revenue they would almost certainly waste, it will force a rethink of a tax code that penalizes income and investment success, and the unconsumed dollars kept from the hands of government will reach today’s and tomorrow’s businesses. Let’s raise a glass to Eduardo Saverin. He’s a true American hero.

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What the hell is this BS? Do the 1% really need an example of how to avoid paying taxes?! Why praise this guy and not the rest of America’s billionaires?? They’re all American heroes, right? They all like to avoid taxes. What patriots they are!

Money saved in Singapore is NOT money invested in American middle class! What kind of asinine logic resulted in that ludicrous notion? Even if he did invest remotely in American businesses, that’s the wrong approach. Business owners want to hire as few people as possible, pay them as little as possible, so they can pocket as much as possible. IF he invests in programs that help to equalize the income disparity, great more power to him… but that’s as sure to happen as Ron Paul becoming PotUS, unfortunately.

Mr. Tamny you really think Congress is going to miss this money? So much so that they reform the tax code? LOL You’re a tool with elitist envy.

Like it or not, successful civil societies run on money from citizens and industry. The notion that being greedy is admirable (and even plays an important role in the economy) is really pathetic. It’s not. Greed is greed.

Mr. Saverin is not a true American hero. In fact, he’s already decided that he’s not really American at all — for a fee, of course.

What a lot of right-wing paranoid nonsense. Yes, how dare Governments tax millionaires and billionaires to pay for such trivial matters as health, education, roads, social welfare. How dare Governments interfere with the selfish pleasures of a young, healthy male such as this guy. How dare Governments try to use some of the selfish excesses of greedy individuals to provide basic necessities for the poorest members of the community. Go ahead and leave America you self-centered young oaf. This guy may have lots of money, but he has a lot to learn about life.

America is taxed far too little, not too much. America’s social welfare spending is far too little, not too much. Millionaires and billionaires receive far too many priveliges, not too little. American ideology is skewed far too much in favour of business, and far too little on the workers and the poor.

“…politicians will hopefully see that if too greedy about collecting the money of others, they’ll eventually collect nothing.” <–for one, grammar mistake ("if too greedy")

What kind of dumb shit statement is this? If they are too greedy? Politicians collect money from taxes not to line their own purses, but use it to operate, to distribute it back to the populace in the form of merit goods (e.g. education, health care), to support industries through subsidies, to fiscally stimulate the economy during recessions, to enforce the law etc.

And under what world would it not be right for the government to "[collect] the money of others"? Where else do you think the government receives funding? And "they'll eventually collect nothing"? Do you honestly believe that having a progressive tax rate ranging from 10-35% will cause all Americans to flee? Or are you only saying the wealthy will leave? You do realize that 133 of the Global Fortune 500 companies are in the US right? Or are you actually predicting the government will collapse because of such a 'burdensome' tax? I'm shaking my head.

Also, governments have budget deficits because they spend more than they can "fleece for dollars". So why are you arguing that politicians sleep soundly at night because they know they have "an endless supply of wealth creators"? They don't have an endless supply of wealth creators. The limit is at the revenue from taxes they receive. And that tax revenue can only be increased in the short term if tax rates go up. The thing is, they can't because of political pressure. And having a budget deficit is burdensome in that governments have to borrow, and then pay interest later on. That is why politicians can't sleep soundly at night when they have to figure out budget deficits.

Oh, and "the unconsumed dollars kept from the hands of government will reach today’s and tomorrow’s businesses"? Perhaps, but if it does, then that means those unconsumed dollars kept from the hands of government also won't be going to that public school, or that public infrastructure that so needs funding. So in the long run, where do we lose more? From a few businesses that marginally invest a bit more, that ultimately lines their pockets in dividends and private income? Or public education that benefits society as a whole, and public infrastructure that paves the way for a brighter future for America's economy?

And that was just skimming through your article and picking out 3-4 lines. Already it shows that your entire article just rests on fallacious logic, wide generalizations, a porous bedrock of evidence (if you can call it that), incorrect assumptions. Why does Forbes even let you publish this?

Following your logic, small business owners like me are the villans for not having a large team of tax advisors to find loop holes. I don’t disagree that the gov is wasteful in spending (pension system, Iraq war?!?) but that doesn’t make tax avoiders like GE, Google and Saverin heros…how about tax avoiding leaches?

Why don’t you write an article about how our tax structure should be rewritten to be more fair with less loop holes and why the GOP fights this tooth and nail because they are in the tax avoiders pockets?